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Macau and PRC authorities target “underground moneyshops”

On August 24, 2015, Macau police raided five pawnshops, arrested 17 people and seized 11 UnionPay point-of-sale terminals in connection with alleged schemes to use UnionPay cards for illegal cross-border money transfers. The police alleged that these pawnshops had improperly used the seized UnionPay devices to make 4,549 transactions with a total value of MOP354.7 million (approximately US$44.4 million), thus serving as “underground moneyshops” without complying with the capital control and customer identification requirements.

In our e-bulletin distributed to clients on Wednesday, we discussed the anti-money laundering cooperation agreement entered into between the People’s Bank of China and the Macau Monetary Authority and the increased focus by the authorities on the laundering of criminal proceeds through Macau. These raids further demonstrate the authorities’ desire to curb potential outflow of criminal proceeds and maintain strong controls over the foreign exchange market.

The Macau Monetary Authority has already banned new UnionPay card terminals in retail stores operating in casino halls since July, and has expressed desire to strengthen supervision over large amount transactions carried through UnionPay card payments.

The PRC Ministry of Public Security also held a conference call on 24 August announcing a nationwide campaign against “underground moneyshops” that will last until the end of November. The announcement said that “underground moneyshops” have been used as conduits for criminal proceeds, including proceeds for corrupt activity. The control of underground moenyshops is also seen as an important measure to maintain foreign exchange control by the PRC authorities, especially amid a weakening currency and stock market. The Ministry said that a similar campaign launched in April this year uncovered 66 underground moneyshops and illegal transactions amounting to RMB430 billion (approximately US$67 billion).

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